Viacom and TCI may link in heavyweight cable venture

VIACOM, the cable television and entertainment company that bought Paramount Communications earlier this year, was last night believed to be close to forming a strategic alliance with Tele-Communications Inc, the largest cable television operator in the US.

Viacom, which owns MTV, loaded up with debt to close its dollars 10bn takeover of Paramount, and the market would like to see asset sales to ease the burden.

For several months Viacom has been in negotiations over the sale of its Madison Square Garden sports arena, together with the two teams that play there - the New York Rangers ice hockey team and Knicks basketball team - and the MSG cable television channel that broadcasts the games.

Analysts put a price tag of about dollars 1bn on Madison Square Garden. Among the interested parties is Liberty Media, in the process of becoming a wholly-owned subsidiary of TCI.

A report in yesterday's Wall Street Journal said that, in addition to nearing agreement on the sale of Madison Square Garden, Viacom and TCI were discussing the formation of a joint-venture cable company.

Analysts say it would make sense for Viacom, a medium-sized player in the cable industry, to link with TCI, putting it in a stronger position to distribute programming.

They are also discussing merging some pay television channels to present a challenge to Time Warner, which produces and shows movies on its Home Box Office cable channel.

Viacom 'B' shares were the second most actively traded stock on the American Stock Exchange yesterday, rising by 37.5 cents to dollars 35 at one stage, but lost ground later to close 25 cents down on the day.